Stock Market & Financial Investment News

VMware plunges after weaker than expected revenue guidanceLast night, VMware (VMW) reported Q4 results that beat analysts’ estimates. However, it issued Q1 and FY13 revenue guidance that trailed expectations. Q1 revenue was forecast at $1.17B-$1.19B, versus consensus $1.25B, while FY13 revenue was seen by the company at $5.23B-$5.35B, well shy of the $5.42B estimate. 2013 license revenue was guided up 8%-11%. The company also announced a restructuring effort that included the elimination of 900 jobs and exiting certain lines of business. The effort is expected to be completed by the end of 2013, and the total charges from the plan were forecast at $90M-$100M, with the majority seen taken in Q1. Sentiment on the Street has been decidedly negative, with at least nine firms either downgrading the stock or lowering their target prices. However, analyst Shaul Eyal at research firm Oppenheimer came to the company’s defense, saying VMware trades only slightly higher than its competitors’ multiples and that it is leveraged to strong secular drivers. The firm said it would be a buyer on any weakness. In early afternoon trading, shares of VMware are down sharply, falling approximately 20% on significantly higher than average volume to $78.27.

FBR keeps Outperform on EMC after report says no spin-offFBR Capital maintains an Outperform rating on shares of EMC (EMC) after Reuters reported Friday that the company's management has deciding against spinning off its stake in VMware (VMW). FBR says that while the news is disappointing, it is not surprising. It also thinks the report could be a near-term positive for VMware, since it could remove the spin-off uncertainty. FBR notes EMC is having an analyst day on March 10.

VMware large DoD contract likely to be delayed, says NomuraNomura said competitors have protested VMware's large Defense Information Systems Agency $1.6B over 5-year contract expected to have been awarded to the company by the end of March. The firm expects a delay in the ward and for the scope of the contract to be modified. Nomura said its unclear how much of the contract is incremental business vs. renewals and weather renewals will be delayed. Shares of VMware are Neutral rated with a $95 price target.

VMware to hold a conference call with JefferiesJefferies Analyst John DiFucci co-hosts a conference call to discuss the VMware vSphere 6 and VMware Integrated OpenStack (VIO) on February 19 at 12 pm. Webcast Link